Retail traders boost chipmaker purchases as rally concerns rise

For months, retail traders watched the semiconductor rally from the sidelines. Now they’re jumping in, and they’re doing it with both feet.

A recent Stocktwits poll found that 42% of retail traders favor AI and chip stocks over software, which drew just 29% of respondents.

The numbers behind the buying spree

Retail ownership of single stocks has climbed to a record 14%, the highest level since at least 2018. For context, that figure sat at roughly 12% during the 2021 meme stock boom, when GameStop and AMC were consuming every corner of financial social media.

The PHLX Semiconductor Index recently posted 18 consecutive days of gains, the longest winning streak on record for the benchmark. Intel’s strong performance contributed meaningfully to that streak.

Bloomberg Intelligence projects semiconductor revenues will grow 57% by 2026, a pace that roughly doubles the broader tech sector’s expected growth rate.

What’s fueling the confidence

Relaxed US-China export restrictions have reopened a massive market for American semiconductor companies. Nvidia and AMD can now resume and expand chip sales to China, removing what had been a significant overhang on revenue projections for both companies.

Meta has committed over $100B to AMD across a five-year deal. Nvidia, meanwhile, announced a $5B investment in Intel.

Why the enthusiasm is making people nervous

Record retail ownership of 14% in single stocks means individual investors are more exposed to equity risk than they were during the meme stock frenzy, which ended with sharp drawdowns in the most popular names.

There’s also the question of whether 57% revenue growth by 2026 is already priced in. If growth materializes but comes in at, say, 45% instead of 57%, the stocks could sell off even as the underlying businesses perform well by any reasonable standard.

Expert opinion on the rally’s sustainability is mixed. When retail investors reach peak allocation to a sector, the risk-reward profile shifts unfavorably as the marginal buyer runs out of dry powder.

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